At the height of the tech boom, bank branches — like bookstores and many things made of bricks and mortar — were considered...

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At the height of the tech boom, bank branches — like bookstores and many things made of bricks and mortar — were considered passé.

The industry’s conventional wisdom said online banking, telephone transactions and debit cards would render branches almost obsolete.

It turns out the pundits were wrong. People want branches, so banks are building and redefining them at a vigorous pace.

There are more commercial-bank branches than ever — about 67,000 — and the number grew by 15 percent between 1994 and 2003, according to the Federal Deposit Insurance Corp. The U.S. population, meanwhile, grew just 10 percent.

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WaMu underscored the continuing importance of branches this week when it reiterated plans to open 250 more branches nationally in 2005. It also will update 200 existing branches.

Bankers have learned they must be everywhere at once.

“You can’t just be on the Internet and be 10 miles away. You have to be on the Internet and five minutes away,” said George Morvis Jr., managing director of Financial Shares, a financial-services consulting firm.

“The individual consumer is not going into a branch at the same rate, but the industry doesn’t mind that. They only want you in there if you want to buy something,” Morvis said.

He attributed the industry’s tech-era idea that they could eliminate branches to wishful thinking.

“Everyone hoped they’d be able to get away from the most expensive channel” for handling transactions, Morvis said.

Adjusting to that reality, many banks have lowered the cost of opening and operating branches, and have turned them into sales vehicles.

U.S. Bank has made supermarket locations a key to its retail-bank strategy, in part because they cost 75 percent to 80 percent less to open than stand-alone branches. Last year, it opened more branches in supermarkets than as stand-alone locations. The in-store branches offer the same products as a traditional branch and give customers a way to visit the bank without making an extra stop.

Officials at U.S. Bank and at other banks say customer transactions in branches are increasing even as online banking booms.

That’s partly because banks in general have more customers due to industry consolidation, population growth and the flight in recent years of money from the equity markets to bank accounts.

Wall Street is again touting banks’ branch networks as valuable, although some analysts worry that the industry has gone overboard.

“One has to question whether we need more branches in the U.S., given that there seems to be one on every corner,” said Frederick Cannon, an analyst at Keefe, Bruyette & Woods.

He declined to pass judgment on Washington Mutual’s aggressive branch expansion plans, saying, “New-branch construction is going to face a more difficult environment over the next two or three years, and the question is, does Washington Mutual have a better mouse trap?”

WaMu says it expects new branches opened since mid-2000 to become profitable as a group in 2005. Its network of more than 1,900 branches is considered the company’s crown jewel by some investors.

WaMu’s patented branch model is intended to be more inviting than a traditional branch, with children’s play areas and teller centers that allow customers and employees to interact more freely.

“People feel intimidated when they come talk to a teller who is sitting above them with a massive marble counter between them,” said WaMu executive vice president Mike Amato, who oversees the retail-branch network.

Melissa Allison: 206-464-3312 or